Christianity and Industry: Nine 


THE ECONOMIC ORDER 

WHAT IS IT? WHAT IS IT WORTH? 

BY 

JOHN H. GRAY 

PROFESSOR OF ECONOMICS, CARLETON COLLEGE 


NEW Hjjrcj YORK 
GEORGE H. DORAN COMPANY 
Ten Cents Net. 


Monograph 




COPYRIGHT, 1923 
BY GEORGE H. DORAN COMPANY 


An address, now revised and enlarged 
delivered before the Evanston Confer¬ 
ence on “Christianity and the Economic 
Order,” under the auspices of the Meth¬ 
odist Federation for Social Service* 
May 23 , 1922 


© Cl A696670 



PRINTED IN THE UNITED STATES OF AMERICA 


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THE ECONOMIC ORDER: 
WHAT IS IT ? WHAT IS IT WORTH ? 

“And money is like muck, not good except it be spread.” 
—Bacon’s Essay on Seditions and Troubles. In 
London Edition 1919 , Vol. II, p. 287. 

The problem of the church today is the problem of 
harmonizing the motives, theories, and practices of com¬ 
mercialism with the life and teachings of Jesus Christ. 
It is needless to say that this can be done only by chang¬ 
ing and reforming commercialism and not by any at¬ 
tempt to adapt the theories or practices of Christianity 
to present-day commercial standards. 

The present industrial and economic life in theory, 
motive and practice is inconsistent with any religion 
of brotherhood or service as taught or practiced by 
Jesus or as confessed by any Christian Church, Protes¬ 
tant or Catholic, or, with those of any other organized 
ecclesiastical body in Christendom. 

The religion of Christ is a religion of equal rights and 
duties, of service leading to life—more abundant life. 
Under a Christian economy, men work that they may 
provide themselves with the means of life and serve the 
economic needs of humanity, but under the present sys¬ 
tem the owners of capital, the controllers of economic 
life and methods work for profits and the resulting 
power, while the mass of mankind, the manual workers, 
who are propertyless, work sullenly, unwillingly, and 
ineffectively from fear and necessity. They lack the 
sense of joy and of service and the inspiration that comes 
from feeling that their reward will correspond to their 


3 


4 


THE ECONOMIC ORDER: 


efforts, or that the results of their labor will do any liv¬ 
ing being any good rather than to serve some vain and 
useless purpose. 

Our present system rests on the theory of self-interest, 
private property, freedom of individual contract, and 
the universality and beneficence of individual competi¬ 
tion. It grew out of conditions that have long since 
passed away. 

We assume today a homogeneous frontier: an agricul-. 
tural population substantially equal in intelligence and 
property, producing primarily for a living and not for 
profit, with little division of labor, small variety of goods, 
limited extent of market, relatively fixed prices, little 
fixed capital, and with all men competing on the basis of 
substantially equal intelligence and wealth, and subject 
to what we vaguely call demand and supply. 

In fact, we are producing, not for a living, but for 
profit, for unknown, world-wide markets with fluctuating 
prices, minute division of labor, colossal masses of fixed 
capital, gigantic trusts, unparalleled inequality of 
wealth, and stratification into what are definite social 
and economic classes. 

In theory, our system is one of self-interest, seeking 
profits, and resting on individual contract expressing the 
will or free choice of the individual. This system is pro¬ 
tected by written constitutions and administered by 
courts which identify common law and individual rights 
with natural rights. Courts which consider that the 
functions of government are to protect property and to 
protect the individual against society and all its agencies. 
To make this system more impossible and even ridic¬ 
ulous, we have ascribed to enormous aggregations of 
capital known as corporations and trusts all the rights 
and privileges of individual or natural persons. 

When this theory of contract took shape, society was 


5 


WHAT IS IT? WHAT IS IT WORTH? 

virtually stagnant, and if the amount of production in¬ 
creased the surplus went to the producers, the work¬ 
men, in fairly equal portions. Rapid invention and dis¬ 
covery and the development of capitalism with its work¬ 
ing classes, without ownership, enormously increased this 
surplus, and caused it to go to the owners of the means 
of production, largely to the exclusion of the workers. 
The primary struggle today is for this surplus in a 
dynamic and progressive society, with its ever-increasing 
surplus. 

When the doctrine of individualism and freedom of 
contract took hold of the minds of men, the great masses 
of mankind, even in England, were in a condition of 
status and want of freedom, and were, in law and in 
fact, excluded from the realm of contract. 

The general growth of the spirit of freedom, more 
particularly since the beginning of the Christian era, and 
the emphasis put upon the right of individual conscience 
and individual judgment, and the value of service and 
the brotherhood of man, the teachings of Christ and the 
Christian Church have brought home each year to the 
minds of men more and more the glaring inconsistency 
between our industrial system and the essence of Chris¬ 
tianity. There have been certain periods, such as the 
Protestant Reformation, the American and French Revo¬ 
lutions, and a period preceding our Civil War with the 
agitation for the abolition of slavery, when this incon¬ 
sistency has been particularly marked and glaring. 

The church can no longer keep aloof from these ulti¬ 
mate issues of right and justice. It is remains neutral, 
it becomes the representative of the small powerful class 
and ceases to have any influence with the mass of man¬ 
kind. If it lends itself to the support of capitalism, it 
will be destroyed with capitalism. If it cannot stem 
the tide of capitalism, our civilization is already doomed. 


6 


THE ECONOMIC ORDER: 


The Christian Church for twenty centuries has been the 
strongest agency of right and justice and in no other 
agency is there like hope today. 

Whether or not a firm and Christian stand on these 
questions would lessen the funds of the church is beside 
the point. It is undesirable that the Church should have 
funds if they are to be used in the face of Christ’s 
teaching to strengthen and support injustice, and social, 
economic, and moral, degradation. 

If the church stands for anything worthwhile, it 
stands for universal brotherhood, and if it is to be used 
by the strong to oppress the weak, it ceases to make any 
effective appeal to the weak. It then becomes not only 
a class institution but an institution appealing to an 
objectionable class, diminishing in numbers, but increas¬ 
ing in power—a class increasingly hostile to the spirit of 
Christianity. 

If we believe in democracy, which is supposed to 
be embodied in Christianity because of its spirit of uni¬ 
versality and justice, we must take a stand against the 
present inequality with its exploitation. We must 
realize that a democracy, even in form, cannot be main¬ 
tained in the midst of great concentrated wealth and 
luxury when the vast majority of the citizens enjoy the 
political franchise and have no property. 

To understand the origin and the significance of 
these doctrines and to appreciate the steps by which we 
came to our present condition, we must understand the 
circumstances out of which they grew, and the changes 
that have come over the world in recent times, more 
particularly in the last one hundred and fifty years. 

The cry today is the necessity of protecting property 
and property rights. The system we have in this coun¬ 
try today is the result of adapting the Common Law 
to the frontier conditions of two generations ago in 


WHAT IS IT? WHAT IS IT WORTH? 7 

America and retaining the system after the frontier con¬ 
ditions have entirely disappeared. 

When the emphasis was first put upon the necessity 
of protecting property, property was widely and rela¬ 
tively equally diffused among all free persons, and con¬ 
sisted primarily of land and tools used by their owners. 
The aim of the protection was to protect one in the 
fruits of his own labor and to ward off arbitrary action 
of absolute and irresponsible governments and the raids 
of robbers and burglars. When we talk of protecting 
property today, we mean chiefly protecting contracts and 
intangible property rights in the shape of stocks, bonds, 
and other contracts—rights designed to establish control 
and protect income of property to which the holders of 
those rights may be and usually are strangers, whose only 
interest in the property is in profits or dividends. The 
object is no longer to protect the producers but’the ab¬ 
sentee legal owners; not to insure one the fruits of his 
own labor, but the fruits of the labor of others, to the 
production of which the owners of these intangible rights 
have often made no contribution whatever. 

The chief evil of such a system is not that it is un¬ 
just and works individual hardship, but that it is so 
unjust as to destroy hope and to so demoralize the whole 
community, as to discourage enterprise, honesty, or 
thrift, and to turn the population from industry to 
speculation and loot, and ultimately to decrease produc¬ 
tion itself. In the long run, no people will produce an 
ample supply of commodities for maintaining a high de¬ 
gree of civilization unless society is so organized as to 
give reasonable hope and assurance that the individual 
member of society will profit by his efficiency, and, by 
and large, reap the benefits of his efforts. Whatever the 
stage of development at any time, it is particularly dif¬ 
ficult to increase the production without such confidence, 


8 


THE ECONOMIC ORDER: 


The original idea of contract in our law—the same 
was true in the Roman Law—was that it was an ar¬ 
rangement evidencing the consent or will of two indi¬ 
vidual natural persons, voluntarily entered into by each 
for his personal economic advantage, each person being 
supposed to be in a position to reject or to accept the 
proposed contract as his interest dictated. This involved 
the economic as well as the legal absence of compulsion. 
If it be said that in previous centuries, to which reference 
is here made, there were very many poor people who were 
not economically independent, the answer is that these 
persons were until the Industrial Revolution (that is 
until machinery made possible enormous profits and cre¬ 
ated large surpluses) excluded in theory and in practice 
from the field of contract. When the doctrine of free 
contract was forming, all idiots, imbeciles, women, do¬ 
mestic servants, manufacturing workmen, and other eco¬ 
nomically dependent classes, were formally excluded 
from contract. The economic relations of such persons 
were all fixed by law and not by contract. 

The wages of labor and the prices of all necessities 
were fixed by public authority. In fact and in deed, 
freedom of contract, or free competition applied to those 
only who were substantially equal in education, intellect, 
and economic goods, and who were able, therefore, to 
accept or to reject the terms of a proposed contract as 
their judgment and their interests dictated. This worked 
particularly well in this conutry so long as there was 
abundant unappropriated good land. The doctrine of 
competition, self-interest, and freedom of contract for 
the people concerned generally worked fairly well under 
such conditions of equality. 

With the growth of political freedom, the relax¬ 
ation of governmental restrictions and the increased 
power of producing commodities, the circumstances sud- 


WHAT IS IT? WHAT IS IT WORTH? 9 


denly changed. Substantially, all adults of both sexes 
have now been brought legally within the realm of con¬ 
tract; but at the same time, the increased wealth created 
by machinery has been concentrated in control or 
management, not only in the hands of the few rich indi¬ 
viduals, but of powerful corporations and gigantic trusts. 
To these combinations, as previously stated, we have 
foolishly and recklessly ascribed all the rights, privileges, 
and powers of natural persons. The so-called competi¬ 
tion is no longer equal or beneficial. A newly arrived un¬ 
educated foreign immigrant can no longer bargain on 
equal or beneficial terms with one of these large artificial 
persons. He is no longer free to accept or reject the 
terms offered—for he is without knowledge of the 
language, laws, customs or opportunities and lacks the 
economic means to live without a daily wage. He must 
accept the offered wage on the mere principle that half a 
living is better than none at all and not, as the theory 
requires, because he improves his economic status by it. 

The whole idea of freedom of contract as interpreted 
in financial contracts has no logical application to such 
inequality or to the wage contract. It would be ridicu¬ 
lous if it were not so painful, un-Christian, and socially 
injurious. Political and legal freedom are mere farces 
without economic freedom. Under a capitalistic system 
of concentrated private property and world division of 
labor, economic freedom does not exist for non-prop- 
ertied people—that is, for the industrial workers. 

We use the terms freedom of contract, demand and 
supply, and competition as if they were fixed by the laws 
of God and were immutable natural laws. Let us look 
at the heart of the matter and see what competition 
is in its essence, and what are its underlying conditions 
and limitations. 

In its origin, economic competition implied that two 


10 


THE ECONOMIC ORDER: 


or more producers of commodities were producing for 
the same market. They would necessarily have to sell 
at the same price. Each, in the attempt to get the 
market, would, in turn, reduce the price until a price 
would be reached where the most efficient would be sell¬ 
ing at a profit while the less efficient would be selling 
at a loss, or, at least without profit and at less remunera¬ 
tion than could supposedly be obtained in some other 
industry. In theory, then, the less efficient producers 
would transfer their labor and capital to some industry 
that promised them greater rewards. Theoretically this 
could be done without loss, or at least without serious 
loss. If such were the case, then all labor and capital 
would necessarily be employed in a manner most ad¬ 
vantageous not only to the owners, but also to the com¬ 
munity as well. The result would be the largest possible 
production and, under the supposition, competition would 
also result in equalizing the returns among both workmen 
and capitalists. Expressed in the lingo of the economists, 
the supposition was that both capital and labor were 
completely mobile, that is, could be transferred from one 
industry to another without serious loss. So long as 
capital consisted chiefly of land and tools carried in the 
kits of the workmen, this supposition was essentially 
true. 

But with the progress of the arts, the evolution of 
machinery, the development of modern means of trans¬ 
portion, and the wide division of labor producing for 
world markets, all this changed. We passed to a con¬ 
dition characterized by what we call fixed capital—a 
condition where the owner—absentee owner—controls 
every phase of production; the plant, the time, the place, 
the amount and the quality of production. The laborers 
have lost the ownership of their tools, they have become 
highly specialized and dependent upon a single employer 


WHAT IS IT? WHAT IS IT WORTH? 11 

in a single factory, while under our governmental sys¬ 
tem, the owners of the capital have the power of flood¬ 
ing the market with raw immigrants, without means, 
without knowledge of our laws and language, or our in¬ 
dustries. Furthermore, the large trusts that employ 
these persons usually not only manage to keep a large 
surplus of this class of labor in any locality, but they own 
many plants in many localities and can play one plant 
off against the other, shutting down without material 
loss a factory when the laborers will not accept the terms 
offered, and making up the loss by speeding up the work 
elsewhere or by restricting the general amount of goods 
on the market and thus raising the price, or by using 
both these methods at the same time. 

But the chief characteristic of this situation, so far 
as our present point is concerned, is that the capital is 
fixed, that is, irrevocably devoted to this industry in 
this place. If a man has a highly specialized, complex 
plant, which must be either scrapped or used for this par¬ 
ticular purpose in this particular place only, till it is worn 
out, the price at which he can afford to sell the product 
rather than to abandon and scrap the plant has no rela¬ 
tion whatever to the true economic cost of production, 
which includes the interest, or capital cost. So far as cost 
of production affects the price of goods, the costs of 
operation alone, excluding the capital cost or interest, 
affects the price in such a case. The capital costs are in¬ 
curred already, and must be borne whether the product 
sells or not, and even if the plant is shut down. For 
interest, depreciation, and repairs go on, irrespective of 
operation, amount of product or the price of the same. 

As already stated, fixed capital is the most important 
characteristic of modern capitalistic production and 
wherever large specialized fixed capital is involved, 
competition, as a regulator of price, or a safeguard to 


12 


THE ECONOMIC ORDER: 


the consumer, disappears. So far as this is true, the 
word competition is actually a misnomer. It has no ap¬ 
plication whatever to any condition of affairs when the 
capital is not mobile, that is, when it cannot, when it 
becomes unprofitable, be transferred without great loss 
to some other industry that promises better returns. The 
automatic element of adjustment, the key of the whole 
doctrine, is lost and the natural laws of economics about 
which our newspapers prate have no application. 

Because of this fact vast quantities of goods are sold 
every day at less than cost as that term is defined under 
the doctrine of free competition. This process can go on, 
and does go on, in every important industry every day 
until the plants are worn out or population grows up to 
absorb the supply. 

Yet we still continue to worship and believe in com¬ 
petition as that doctrine was formulated by David 
Ricardo, the father of modern economics, a century ago. 
Some things ought to be said about the origin of this 
doctrine. First, it was formulated before the age of 
large, highly specialized, fixed capital and the world divi¬ 
sion of labor. In the next place, Ricardo was a Jew, 
and Jew T s for thousands of years have been persecuted, 
and compelled to keep their wealth in the form of money, 
and other forms of concealable and mobile capital. They 
are traders and not producers. Again, Ricardo was a 
banker and virtually all banking capital is fluid or mobile. 
Competition has a wider range here than in any other 
important field, for if a banker tries to employ more capi¬ 
tal in his business than proves profitable, he can with¬ 
draw part of it without loss. Finally, Ricardo was a 
metropolitan, and metropolitan life is primarily a trad¬ 
ing life—a system of brokerage, where gains are made, 
not by producing commodities, but by trading in them, 
and speculating in them as prices change. It is not 


WHAT IS IT? WHAT IS IT WORTH? 13 

strange, therefore, that Ricardo, who knew little about 
production or fixed capital, should have based his system 
of economics on the doctrine that capital and labor are 
entirely mobile, and competition universal and, there¬ 
fore, beneficent, and that economic well being rests on 
commercial trading rather than on production. Hence 
the orgy of commercialism and commercial speculation 
under which we have lived for a century. For the shrewd 
trader makes his money on a fall of prices as much as 
on a rise. Change and fluctuating prices are the very 
life of trade and speculation, but the death of thrift, 
production and welfare. As a result of this doctrine, 
we have become a nation of speculators and gamblers; 
acquisition, not production, is the goal of American 
youth and the chief aim of our property owners. 

The spirit of acquisition is in the air, in our homes, 
in our churches, our schools, our colleges, our newspa¬ 
pers and, most of all, in our educational efforts, as mani¬ 
fested in our text books and schools of business. The 
whole emphasis is on acquisition. So far as we pay any 
attention to production, the emphasis is on profits in 
production and not on the real purpose of all sound 
economic life and efforts, namely, to serve humanity 
and to meet the economic needs of society. 

The Ricardian idea of competition is embodied in our 
rigid constitutions, our Common Law, our legis¬ 
lation, and our courts, which undertake to interpret it 
strictly; while our owners of capital, our trading, com¬ 
mercial and banking interests dominate industry, legis¬ 
lation, and administration. Such a system inevitably 
leads, first to ignorance of industry and all of its con¬ 
ditions by the owners who dominate industry, next, to 
indifference to the welfare and interests of both pro¬ 
ducers and consumers and, above all, to adulteration of 
goods and to a general deterioration of quality, and 


14 


THE ECONOMIC ORDER: 


finally, to exploitation of all the weaker members of 
society—producers and consumers alike—by the agree¬ 
ments, combinations, monopolies and trusts to voluntar¬ 
ily destroy and prevent competition. The circumstances 
that make exploitation possible also tend constantly to 
increase the degree of inequality of wealth. At the same 
time, the increasing means of communication make pos¬ 
sible the united and combined action of all the major 
capitalistic interests for such exploitation and for the 
maintenance of the system. 

The competitive system as heretofore interpreted was 
doomed even before the war came, because of the amount 
of fixed capital, the inequality of the parties and the 
various factors already alluded to, more especially the 
length of time necessary to complete the process of pro¬ 
duction from the beginning of that process until the com¬ 
modity reaches the final consumer and satisfies his wants. 
But the war has taught us that so long drawn out a 
process extending over such long stretches of time, and in 
many instances almost encircling the globe can be car¬ 
ried out success ’ully only when all parts of the complex 
organism are carefully and completely co-ordinated and 
work in perfect harmony. 

The war not only disturbed, for the time being, 
the necessary co-ordination but created a hate and a 
fear and an international jealousy that are in danger of 
disturbing the industrial machine at any moment in 
enough places to paralyze the whole establishment. The 
nations do it by legislative prohibitions of exports and 
imports, by unheard-of custom duties and threats of cus¬ 
tom duties on exports and imports. The trusts do it 
by curtailing supply and arbitrarily raising prices. The 
workers do it by large masses of them going on strike 
at one time. In fact the war taught us that with the 
large masses of fixed capital, the wide extent of mar- 


WHAT IS IT? WHAT IS IT WORTH? 15 

kets, and the instability of credit and prices, any group of 
speculators, raiders, or workmen reap their rewards and 
unload and disappear long before any competitive force 
can work a remedy and bring about a readjustment. The 
time element, with the large mass of capital required to 
compete, and the certainty that with proper co-ordi¬ 
nation and balance of factors there is already enough 
if not too much permanent investment to be profitable 
when the emergency passes, prevents attempts at compe¬ 
tition. No set of men would be able or would wish to 
undertake to duplicate the Pennsylvania Railroad sim¬ 
ply because a strike stopped service on that road, nor 
would investors undertake to duplicate all the plants 
of the United States Steel Corporation because that 
company curtailed production, raised prices, made ex¬ 
cessive profits, or otherwise behaved badly. To mention 
the idea is to show the absurdity of it. 

Competition is theoretically possible, but practically 
impossible for a multitude of reasons. Among these are 
the limitation of natural resources of all kinds, the 
enormous amount of capital necessary even to make a 
pretense, or attempt even a threat of competition, to say 
nothing of the fact that those now in control of the 
plants also control credit and transportation. But the 
main reason is that such a mass of capital in the hands 
of a single management can always change the practices 
and lower its prices and that it is sufficient for supplying 
the whole market. Therefore, to attempt to compete 
would be to duplicate that investment and to create ex¬ 
cessive investment in the industry. The capital being 
fixed, a simple fight in cutting prices and selling below 
economic cost would take place (if the pretense of 
competition were genuine) to see which company could 
bankrupt the other and then buy its plants much below 
cost. Having acquired a monopoly by buying its 


16 


THE ECONOMIC ORDER: 


competitor, the victor immediately recoups itself for the 
expenses of its war. But this interesting and highly dis¬ 
turbing phenomenon has none of the elements of econ¬ 
omic competition in the Ricardian sense of the word. 
If there be immutable and natural laws, as our bankers 
and our press believe, they are not laws working in the 
interest of the consumer, of justice, or of social peace. 
They are the laws of the jungle. 

We have heard much in recent months to the effect 
that business is recovering. The chief evidence adduced 
in support of this proposition is the rise of the price 
of stocks and bonds on the market and an increase of 
net railroad earnings. Increased activity on the Ex¬ 
changes is always regarded as a sign of prosperity by 
speculators irrespective of what is going on in the indus¬ 
trial and economic life of the peoples. Those who preach 
the doctrine, and with technical correctness, in season 
and out of season that general wages cannot be raised 
successfully without an increase of production, would do 
well to recall that production has fallen off. The fact 
is, that the apparent increase in net railroad earnings 
is not genuine but is in a large part a new bookkeeping 
gain obtained by starving maintenance, 1 and the balance 
is obtained by deflating labor to an extent sufficient to 
bring on the pending strike. While the Interstate 1 Com¬ 
merce Commission does not find inadequate maintenance 
as a fact, pleading the inadequate record in the case 
under consideration, after citing the testimony of the 
railroad presidents to the effect that the roads are under- 

1 See Decision Interstate Commerce Commission, May 16, 1922, 
where it is shown that traffic in 1921 was 25 per cent less than in 
1920 and amount spent for maintenance in 1921 was $606,284,581 less 
than in 1920. 

Cf. Howard Elliott testimony House Hearings 67 Cong. 2nd Ses¬ 
sion H. R. 6861 and 8131 page 1576. At page 574 and 576 he says 
the reported earnings for the first three months of 1922 were $161,- 
000,000 but that the deferred maintenance on equipment alone would 
require and would absorb $111,000,000 of this. 



WHAT IS IT? WHAT IS IT WORTH? 17 

maintained, the Commission says: “in brief, we are left 
with the abiding, if composite, impression that, on the 
whole, the railway plant of the country was not at the 
end of 1921, and is not now (May 16, 1922), in as good 
condition as it should be, and is far from ready to meet 
the demands which will come with the resumption of 
general business activity.” 

In fact the undermaintenance reached such a stage that 
trainmen refused to move trains because of the con¬ 
dition of the rolling stock and the Interstate Commission 
voluntarily called the attention of the President to this 
dangerous condition. The President was so sufficiently 
impressed with the truth of the charges as to assume their 
truth in his strike message to Congress in August, 1922. 
Reported net gains that rest on such a basis can hardly 
be a cause of great rejoicing or of permanent prosperity. 
No judgment is here expressed as to whether railroad 
wages were too high or too low. Attention is simply 
called to the false standard of prosperity. Prosperity 
comes ultimately from increased production not from 
taking something from one class and giving it to another. 
Increased railroad earnings arising from increased rates 
and decreased traffic and wages are not direct causes of 
increasing prosperity. They are much more likely to 
be a cause of strikes, social unrest and ultimate depres¬ 
sion. 

There can be no increase in real prosperity except 
by an increase of production followed by an equitable 
distribution of the product. But such an idea does not 
seem to have entered the minds of the railroad managers. 
In a profit-seeking age their sole criterion of general 
prosperity is the increase of railroad profits. 

The present capitalistic system with its absentee own¬ 
ership and control of industry—by ownership divorced 
from productive effort—has heretofore found its chief 


18 


THE ECONOMIC ORDER: 


defense in the assertion that however imperfect it may 
be, and however cruel and harsh, unjust and un-Christian, 
at least it is efficient in that it results in a large sum 
total of production. The further assumption is that such 
production is fundamentally necessary for progress and 
that it can be obtained in no other way. It is a neces¬ 
sary corollary of this argument that under a competitive 
system this increased production will by natural forces 
be widely diffused and thus benefit the whole com¬ 
munity. 

The burden of exploitation always falls on the weak 
unorganized portions of the community, whether work¬ 
ers or consumers; while the gain to the profiteers is 
usually only a very small part of the loss to the public 
Had one read the newspapers two years ago he would 
have come to the conclusion that the absentee owners 
of capital and masters of our economic fate had but one 
desire, to fulfil'the words of Christ—and feed the hungry 
and clothe the naked. Their one cry was “produce! pro¬ 
duce!” and their one complaint was that workmen were 
lazy, greedy and inefficient, and were restricting output. 
But in the twinkling of an eye, when commodity prices 
began to drop and profits to decrease, the whole indus¬ 
trial machine was paralyzed and almost stopped, and 
millions of men were thrown out of employment. The 
demonstration was complete that profits—large profits, 
based on the standard of war profiteering, was the sole 
object of the owners. 

If it be said that the owners were helpless and not 
to blame, I admit it; but the system is thereby con¬ 
demned. For the appalling need, after the devastation 
of war, the men, the material, and all the machinery for 
an adequate production remained, so far as our country 
is concerned. But it could not be used except by the 
consent and on the terms of the owners and their sole 


WHAT IS IT? WHAT IS IT WORTH? 19 

standard was not production, but profits, based on the 
high war and post-war standards of profits. There is a 
grain of truth in the suggestion that high prices cannot 
be paid except from large production, but not enough to 
sustain the argument as a practical working proposition 
under the complex system of individualism and wide 
division of labor. It is true that no more can be paid out 
of wages than is produced, and that a general high level 
of wages can come only from large production. 

As there was a natural limit to the exploitation of 
workmen as long as our unappropriated natural resources 
remained abundant, so it is true that the world division 
of labor and the capitalistic system, so long as the work¬ 
men were reasonably satisfied and worked effectively, 
resulted in an increased production. But having 
exhausted our unappropriated natural resources, the 
exploited workmen cannot escape from industrial ex¬ 
ploitation by taking up a homestead. Since we have 
turned our whole industrial machine into a profit-making 
speculation, the individual workman has not only lost 
hope of escape from the status of workman but has 
equally concluded that he cannot expect, under present 
conditions, to get all or even a considerable share of an 
increase in product from his increased efficiency. There¬ 
fore he naturally asks why he should work harder that 
others may reap more. 

The only real incentive to greater industrial effort or to 
thrift is the belief that one will himself reap the re¬ 
ward of his greater effort and increased thrift, that is, 
that he will reap the fruits of his own labor and absti¬ 
nence, or saving, and that he is rendering a service to 
humanity by his efforts. Speaking by and large, the 
workman has lost this faith. Hence he is unwilling to 
produce more. 

The cry that the laborers restrict output and oppose 


20 


THE ECONOMIC ORDER: 


labor-saving machinery is as old as capitalism and profit- 
seeking. The charges in a literal sense are true, but the 
question of the moral responsibility in the matter, and the 
use made of these charges require careful consideration. 
Of course, the laborers limit output and oppose the intro¬ 
duction of labor-saving machinery. They adopted the 
theory and the practice from the capitalists just as they 
follow the fashions of the privileged classes in clothes, 
manners, and morals. The author of “The Mirrors of 
Downing Street” puts the case very clearly on page one 
hundred and seventy. In speaking of the materialism 
of the age he says: “But though the leaders of labour 
are guilty of this corruption, there is no doubt that the 
ugliness of spirit in democracy is the reflection of the 
ugly life led by the privileged classes. There is no 
reproach for democracy when it looks upward. It sees 
nothing but the reckless and useless display of wealth, 
nothing in the full shine of prosperity but a Bacchanalian 
horde of irresponsible sensualists, nothing then but a 
ramp of unashamed hedonism and a hedonism of the low¬ 
est order.” * * * “where is there now among the 

possessing classes an example even of simplicity of dress, 
a modesty in behavior, temperance in conduct, and thrift 
in living? As for any higher example—an example of 
wisdom, duty, self sacrifice and moral earnestness—it is 
nowhere visible in our national life to those who look 
upward.” 

But to return to the restrictions of output. Has there 
ever been a trust, one important motive for the forma¬ 
tion of which was not to acquire power enough to enable 
it to restrict output and keep up or raise prices? As to 
those opposing labor saving machinery, the laborers do 
generally oppose it, because a long and sad experience 
has taught them that, under the present organization of 
society, while the laborers are usually displaced all or 


WHAT IS IT? WHAT IS IT WORTH? 21 


the major portions of the gains from such improved 
machinery go in the first instance to the capitalists and 
the owners—in increased profits and ultimately to the 
consumers in cheaper goods. Whoever heard of a work-, 
man who became his own employer objecting to im¬ 
proved tools, or who wished to work with inefficient 
equipment? To analyze the problem is to show that 
the charge as made and interpreted by the employers is 
against human nature and the constitution of man. 

This is a marked case of danger of averages. Im¬ 
proved machinery means increased production and ulti¬ 
mately cheaper goods in that industry; but the change 
usually means injury to the particular workmen in that 
industry and often it means a total loss of their jobs. 
It is neither logical nor just to expect an individual 
workman or a group of workmen to be willing to be 
thrown out of employment in order that in a future gen¬ 
eration other consumers may have the goods produced in 
that industry cheaper. He is likely to be a very small 
consumer, and often not a consumer at all, of the goods 
he is producing. Therefore, under our present system of 
ownership, division of labor, and competition, he has no 
interest in the price of goods he is producing but he has a 
paramount interest in holding his job, of which the 
improved machinery is likely to deprive him. 

When the street cars were electrified most of the 
drivers were displaced by younger men with much more 
education and technical training. All the talk about 
how much cheaper passengers could be carried by elec¬ 
tricity did not procure another job or feed the families 
of the former drivers. Under our competitive system, 
the drivers would have been fools if they had not pre¬ 
vented the electrification if it had been in their power 
to do so. To demand, under our present system, that 
hired workers should welcome, or should refuse to oppose, 


22 


THE ECONOMIC ORDER: 


improved machinery and processes that come as rapidly 
as they have come in this country, is to deny the funda¬ 
mental axiom—self interest—of the competitive system 
and to require them willingly and knowingly to bear 
all the burden of human progress. We do not demand 
such altruistic action on the part of any other element 
in our population. No! the workmen are not opposed 
to improved machinery or increased production, but 
oppose these things only when they know or believe that 
all the gains, or the major portion thereof, arising from 
such improvements go to other elements in society, and 
that they, themselves, are made absolutely worse off and 
placed in the position where they are less able to defend 
their rights and interests. 

As previously remarked, the struggle over these mat¬ 
ters is simply a part of the immense struggle for a part 
of the surplus created by progress. The same principle 
is well illustrated by the history of the so-called efficiency 
movement. When the engineers made a great and im¬ 
portant discovery that by study and experiment an 
enormous saving of human effort in production could be 
made and that the world might thus have vastly more 
commodities to consume without additional effort, or, 
still better, might have as many commodities by less 
effort and thus acquire a large amount of leisure for the 
amenities of life, the owners of capital seized upon the 
idea as a means of destroying the unions and increasing 
the profits, that is, of seizing the major portions of the 
surplus created. They proposed to place the workmen 
under much more rigid control and to allow them, 
roughly speaking, from ten to twenty-five per cent more 
wages, and estimated that the profits would be from 
fifty to three hundred per cent above those of the old 
regime. The workmen looked with alarm upon the pos¬ 
sible use of such increased and concentrated profits as a 


WHAT IS IT? WHAT IS IT WORTH? 23 


means of further inequality and exploitation when once 
the unions had been broken. They would have none of 
it! The world was thus deprived of one of the greatest 
possible steps forward. For the engineers had really 
discovered how to do the work of the world with much 
less human effort but, unfortunately, the owners of indus¬ 
try, whose hired men the engineers were, wrecked the 
scheme on the profit idea. Again, it was not increased 
production or human welfare but increased profits the 
owners were after, and the engineers were merely their 
tools. 

When the National Association of Railroad Security 
Owners, chiefly owners of bonds, presented a scheme to 
Congress for turning the roads back to the private own¬ 
ers after the war, they were publicly rebuked by the 
railroad executives, speaking through President Smith 
of the New York Central for interfering with railroad 
management on the ground that as bond holders they 
had no interest in the matter and no right to try to exer¬ 
cise any influence on the management. Yet this asso¬ 
ciation represents, primarily, bond holders and the face 
value of the bonds approaches nearly twice that of the 
stocks. Furthermore, the bonds have been mostly paid 
for at par while the stock carrying full control is in large 
part water. Excluding the property acquired out of the 
surplus earnings, the bond holders have probably put 
from three to four times as much of their own money into 
the railroads as the stockholders have; yet we are told 
that if this whole investment is not left in the hands 
of the stockholders and made a football of speculation, 
private initiative, thrift, and the accumulation of cap¬ 
ital in general will cease, and civilization will decline. 
Again, it is ownership irrespective of contribution to the 
service that claims the control and direction and the 
right to use the whole capital or investment for specu- 


24 


THE ECONOMIC ORDER: 


lative gains. It is the old argument in favor of protect¬ 
ing property, of freedom of contract, and so on. 

So long as men would work effectively and allow the 
product to go to the speculators, the prize of large specu¬ 
lative individual fortunes connected with mere owner¬ 
ship was, indeed, an incentive to industrial energy and 
enterprise. So long as every man, rich or poor, felt that 
he had a chance to get to the top and get control of so 
vast a power, the incentive to energy and effort was tre¬ 
mendous. But the system of turning over the industrial 
machine with its vast surplus gains, to the sepculators, 
has resulted in such a degree of dissatisfaction on the 
part of the workmen, and such an ignorance of industrial 
processes on the part of the absentee owners, that work¬ 
men refuse longer to produce for such a purpose. The 
goal has disappeared from industry so far as the workers 
are concerned. Instead of producing more we are pro¬ 
ducing less, and this condition is likley to grow worse 
rather than better, until the system undergoes radical 
changes, and the workmen come to believe that if they 
produce more they will receive more. This is true in 
times of industrial peace, while the system leads indi¬ 
rectly to an increasing number and severity of strikes, 
such as those of the summer of 1921 and 1922. At pres¬ 
ent the whole industrial situation is one of highly 
unstable equilibrium. 

The condition in America today, with its direction 
of industry by capitalistic absentee owners, with absolute 
control, but without technical knowledge of industry or 
other interest than profits in the outcome of industry, 
is quite comparable to the absentee landlordism in Ire¬ 
land forty years ago. The absentee landlordism was 
defended on the arguments of the sacredness of private 
property, private initiative and thrift that now support 
our capitalistic regime. But the system ran its course 


WHAT IS IT? WHAT IS IT WORTH? 25 

till Ireland was almost depopulated, production almost 
ceased and profits entirely disappeared. The system be¬ 
came unable to support itself, as the present capitalistic 
system must do at an early date. It died of its own rot¬ 
tenness. England, to prevent the total disappearance of 
the Irish nation by starvation and emigration, had to 
renounce every theory used today to defend capitalism 
and establish a system of reorganization, ownership, and 
use of the economic resources of Ireland, whose end is 
co-operation, production, service, and human welfare, 
and not merely profits for absentee landlords who take 
no part in industry, have no knowledge of it, and whose 
only claim to an ever increasing portion of the rewards 
rests on mere ownership disassociated from service. 

England now protects property and property rights 
in Ireland in the sense in which those terms were used 
when they originated some centuries ago. The law 
attempts now to secure that one who works in Ireland 
shall have access to the natural resources and shall receive 
the fruits of his labor, and, thereby efficiency in pro¬ 
duction, thrift, and the accumulation of capital are en¬ 
couraged. Efficiency of labor, thrift and the accumu¬ 
lation of capital have never been encouraged in any 
nation by encouraging speculation, or offering the choice 
of large speculative individual fortunes, or by turning 
over the ownership and control of industry and natural 
resources to those who use them for acquisitive purposes 
only. This is all the more true as population increases 
and natural resources are exhausted or appropriated to 
individual ownership. 

Can any one point to a single very rich man, except 
Henry Ford, who is devoting his personal efforts and 
energy to the productive side of industry or who is rea¬ 
sonably familiar with the technical processes of indus¬ 
try? How many of the large fortunes have been made 


26 


THE ECONOMIC ORDER: 


from salaries, interest and dividends, or even from the 
speculative buying or selling of commodities produced 
by these individual owners? They are usually made from 
financial manipulation and speculation in natural re¬ 
sources. 

Rich men drift more and more into New York and 
so far as they work at all—and many of them work very 
hard—they devote their whole life to the financial side, 
to the manipulation of investments, of stocks and bonds, 
and natural resources, the formation of trusts and monop¬ 
olies, manipulation of values through the control of 
credit, rather than to the increase of production. The 
motives of such men are acquisitive, not productive! 
They seek profits and individual fortunes, not social 
justice or human welfare. 

Such profit seeking, with its increasing centralized 
ownership and control, not only leads to increasing in¬ 
equality of wealth and to dissatisfaction and the dis¬ 
couragement of efficiency in the working classes, but this 
domination is beginning to have a like effect on the tech¬ 
nicians in industry. The life is going out of them and 
they are becoming more enamored with the profit idea. 
They are hampered almost as much as the workers are 
in their attempt to improve the technical side of indus¬ 
try and particularly in their relation to the workman. 
They are using their talents, more and more, in the inter¬ 
ests of speculation and acquisition rather than in pro¬ 
duction. . They not only do not have a free hand in pro¬ 
duction, but, forced to yield their expert judgment to the 
orders of the nontechnical owners, in order to get on 
personally in an economic sense, they are becoming mere 
instruments or tools of owners. 

The curse of the system is not primarily its inequality, 
or its injustice, but the fact that it is checking and 
destroying industry and turning our economic life into 


WHAT IS IT? WHAT IS IT WORTH? 27 

a fever of speculation. It has the same effect on produc¬ 
tion that the depreciated currencies of Europe have to¬ 
day. The spirit of mere acquisition irrespective of serv¬ 
ice is corrupting the youth and making them seekers of 
fortunes at any cost. It is undermining religion and 
making the call of the church to fall on dull ears. 

It is inevitable that, when the idea of profits has 
seized and dominates a nation and the control of eco¬ 
nomic life has passed to concentrated ownership and con¬ 
trol, separated from industrial knowledge and a share 
in productive effort, industry will stagnate and retrograde 
in both quality and quantity. It is equally certain, also, 
that the spirit of domination in the owners will take the 
form of a conscious attempt to dominate all the means 
of education and the direction of religious teaching; 
what has in fact taken place in regard to the workmen 
and the technical force in industry is fast becoming true 
in regard to the schools, colleges, churches, and the press. 
If profit seeking is the chief end of man why should not 
these powerful agencies also be used to further that end? 
If a preacher, or a teacher, or an editor cannot find the 
means of living with the natural resources exhausted, or 
appropriated to the hands of the profit seekers, except 
on the terms granted by such owners, why should the 
owners not make it a condition of life for these classes 
that they lend themselves to the cause of protecting and 
strengthening this system? 

The social surplus, actual and prospective, is fast 
passing into the concentrated hands of the profit seekers. 
On them we must depend for all the funds for the fur¬ 
thering of education, religion and cultural purposes. Un¬ 
til we can change these ideals and purpose on which our 
present industrial life rests, with its world division of 
labor, the professional classes are absolutely dependent 
for financial life, and even for existence, on this class, and, 


28 


THE ECONOMIC ORDER: 


if the financial streams for these higher purposes are not 
to dry up, we must submit to the dictates and desires of 
this class. But this class constitutes but a small part of 
our population, and a part not interested in these institu- 
oitns except as aids to profit seeking. The contributions 
of this class are primarily insurance funds, contributed 
for the maintenance of the profit-making system. 

But as long as these traditionally religious and cul¬ 
tural agencies are used for such purposes they will make 
no appeal to the mass of the people and true religion 
must languish. It is said that the United States Steel 
Corporation has built many churches besides contribut¬ 
ing to a multitude of others. It is questionable whether 
these contributions are in motive or in result an aid to 
religion. If churches are to have a helpful influence on 
the religious life of their members, the members must 
feel they have a vital part in the construction and main¬ 
tenance of the church. A church dominated by outside 
influences is as dead as an industry in which the work¬ 
ers have no influence. 

In what I have just said I have not overlooked the 
pleas for the necessity of rewarding capital or manage¬ 
ment. Under any system of private property capital 
will not be accumulated unless it is compensated. The 
fact that the English government could borrow for un¬ 
productive expenditure at three per cent nearly one hun¬ 
dred and fifty years ago, and that our railroads, with all 
their wasteful competition and danger of bankruptcy, 
could borrow at less than four per cent in the twentieth 
century (the total railroad debt, much of it of long stand¬ 
ing, and at corresponding high rates, bore but an average 
of 4.20 per cent eight years ago) indicates how large a 
reward is necessary to bring about the accumulation of 
capital. 


WHAT IS IT? WHAT IS IT WORTH? 29 

As for the rewards of management, the speculative 
profits go not to the actual managers but to the owners, 
who have in large measure ceased to have any but a 
financial interest or relation to the industry. The real 
managers are merely hired men—exploited equally with 
the workmen. The active managers are so hampered by 
the mere owners as to deprive the public of the skilled 
management to which it is entitled. Railroad manage¬ 
ment, before the control passed to the bankers a genera¬ 
tion ago, was not free from gross abuses, but it had a 
degree of energy and efficiency wholly unknown today. 
Managers are rewarded and promoted not for furthering 
industry, but for adding to the gains of the owners, often 
in ways highly injurious to the public. The chief inter¬ 
est in regard to the steel industry in recent days has not 
been in the production or consumption of steel, but in 
regard to the effects of proposed steel mergers on the 
stock market. Much more space in the newspapers has 
been given to the probable effect on the price of stocks 
than the possible effects on the public welfare. The 
profits go to the owners because they are owners, and, 
not to the technical men—the engineers—who are nomi¬ 
nally in charge of industry. These technical men are told 
what to make, how much, and when, and how, and where, 
and above all, how to deal with labor. The orders are 
given by men ignorant of the industry and are in the 
supposed interest of profits and not of efficient pro¬ 
duction. 

If it be said that these large speculative profits are 
required to cover the risks of industry, the answer is 
that the system increases, manifold, the legimate risks of 
industry, and, that, as at present worked with all the 
trusts, monopolies, shuttings down, and startings up of 
industry, the chief risks are thrown upon the bondhold- 

i 


30 


THE ECONOMIC ORDER: 


ers—the creditors—and the workmen and necessarily 
ultimately on the consumers. Consequently the profits do 
not go to those who assume the risk, and the risks are 
altogether larger than they ought to be from the stand¬ 
point of the public welfare. In short the owners multi¬ 
ply the risks, collect for assuming such magnified risks, 
and then throw the enlarged burden of the risks on the 
weaker members of society. With the present unequal 
bargaining power of the parties, can any disinterested 
persons look at the millions of men now out of employ¬ 
ment and the millions of others whose actual earnings 
have been reduced below the pre-war level, and then 
take account of the war profits, and having taken full 
note of all profits and all writings down of the inven¬ 
tories, and the losses to the owners, come to the con¬ 
clusion that the owners of title have borne the whole or 
even the major part of the burden of deflation, and read¬ 
justment, or that the laborers, the consumers, and the 
salaried classes have not been the chief sufferers during 
the period of readjustment? 

The present railroad and coal strikes are the direct 
results of the attempts of the owners to hold their full 
war profits and to throw the burdens of readjustment and 
deflation on the public and the workers. Furthermore 
the system results often in inflicting enormous losses on 
the public for the sake, or for even the hope, of small 
gains for the manipulators. The surplus product and 
gains during the period of rising prices went to the own¬ 
ers on the theory that such gains were a reward for the 
risks of industry, and, that industry would languish and 
accumulation of capital cease if a chance of such gains 
and such large fortunes were not offered. Ask the three 
to five million men out of employment the last two years 
who is bearing the risks and ultimate losses of industry 
during the deflation period. Ask the coal miners and 


WHAT IS IT? WHAT IS IT WORTH? 31 

the cotton operatives and the railroad workers who are 
now bearing the burden of the risks. In theory these 
men have a fixed and assured wage—even if a small one 
—and the owners have a variable reward with the chance 
of large gains in prosperous times. Nobody can deny 
that the owners got the large gains during the war period, 
in unregulated business, through inflated prices, in the 
railroads through high rentals. Do they pay the fixed 
wages called for by their theory during depressed times? 
Rather they take the chance and the fact of large gains 
when they come, and refuse to pay the fixed wages, 
or any wages at all when hard times come. If reply be 
made that the owners cannot do otherwise under a com¬ 
petitive system, and that we cannot make men produce 
permanently at a loss, I grant all that! But, none the 
less, if workers cannot get the fixed wages and the stable 
employment called for by the theory, the argument fails, 
and the theory on which we are working is fallacious. 
In fact the so-called competitive system under which we 
live gives the gains to the owners and manipulators dur¬ 
ing rising prices and throws the burdens on the weaker 
members of society during the periods of falling prices 
and depressions. 

If the owners actually get the large profits and do not 
in fact bear the losses, the theory of profits as a reward 
for risk bearing falls to the ground. 

The fact that the soft coal miners as a whole, have 
had work, through good times and bad during the last 
thirty years a little more than two-thirds of the working 
days on the average, shows conclusively who bears the 
risks in this industry. On the whole, the operatives have, 
in fact, drawn liberal profits from the industry. But no 
part of these profits have gone to stabilize the industry, 
to reduce prices to the consumer, or to compensate the 
workmen for lost time. Hence the present chaos in this 


32 


THE ECONOMIC ORDER: 


industry. The coal operators and owners may not be 
bad men, but they are not living up to the theory that 
they bear the risks of the industry. If they are good men 
they are supporting and on the whole profiting by a very 
bad system. I am not condemning the men—but the 
system. Nor is the illustration from the soft coal indus¬ 
try as great a condemnation of the competitive profit 
system as could be chosen. For of all basic industries 
this is perhaps the least subject to trust control. In the 
other important industries we must add to the evils and 
failure of competition the great evils of trusts, combi¬ 
nations and monopolies, and a multitude of artificial 
restraints on competition. 

One who has had his eye on Congress for the last four 
years, and has observed the unparalleled lobbies at work 
there, must conclude that the profitseekers are not so 
wedded to our unrestricted, private, initiative, individual 
private enterprise, freedom of contract, free competition 
and the necessity of keeping the government away from 
any connection with business, and letting private indi¬ 
viduals assume the control and the risks of industry as 
one has been taught to believe. On the contrary, he is 
profoundly impressed with the fact that if the capitalists 
have agreed to bear the risks of industry they are not 
cheerfully meeting their contract obligations but are seek¬ 
ing by all known means, honest and dishonest, open and 
secret, fair and unfair, to obtain through government 
action, political, legislative, and administrative, special 
privileges and financial advantages for themselves. They 
seek everything from favorable government contracts by 
bribery, to ship subsidies and protective tariffs by legis¬ 
lation. 

Anyone who knows our American street car history, 
knows how the street car owners, as long as the industry 
was profitable, pleaded the sacredness of their contract 


WHAT IS IT? WHAT IS IT WORTH? 33 

agreements on fares, and talked about the glory of private 
initiative and private enterprise and the unwisdom and 
impossibility of the public assuming the risks of the 
industry. In prosperous times millions, and tens of 
millions, were made by the private owners in reckless 
speculation in this field. Did the companies stand by 
their contracts and assume the risks of the business and 
accept their losses when profits began to fall? Did they 
put back into the industry any part of the vast sums 
that had been wickedly and unjustly taken out of it? 
Let New York, Boston and Chicago answer. They 
whined like babies, reduced the service, pulled up tracks, 
and threatened to abandon the whole service unless they 
were relieved of their contracts and losses, and talked 
not about contract rights, but of fairness, equity, and 
especially about the need of improving the service, at 
the same time confessing their inability to render any 
service without aid. What they did in this industry 
by whining and threatening they accomplished in other 
important industries by trusts, manipulation, and by de¬ 
pressing and exploiting labor. Their sense of responsi¬ 
bility for our economic life and public welfare are voiced 
by the motto, “Assume the risks of industry and charge 
enormous commissions for it while the profits are good, 
and repudiate contracts and throw the risks entirely on 
the workers and the consumers when the profits tend 
to drop and disappear.” Surely owners cannot be said 
to bear the risks of business until the laborers are as¬ 
sured permanent employment and a living wage at all 
times, and until the owners actually bear the losses as 
well as reap the profits. In fact, under the present organ¬ 
ization of industry, the party that is weakest in 
bargaining power bears the brunt and, with present con¬ 
centrated ownership and control, the workmen, and par¬ 
ticularly the unorganized workmen, and consumers bear 


34 


THE ECONOMIC ORDER: 


the main portion of the burden and the actual burden is 
increased many fold beyond what is necessary by specu¬ 
lation. 

Even at the risks of repetition, some further illustra¬ 
tions of the principles, herein already set forth, are re¬ 
quired. The impossibility of competition and the so¬ 
cial and religious dangers at hand are fully illustrated by 
the history and present status of the four great funda¬ 
mental, basic industries: railroads, steel, coal, and oil. 
These vital industries represent every phase of the evolu¬ 
tion of industry. The annihilation of competition, 
monopolies, trusts and conspiracies in restraint of trade 
have been illegal from time immemorial under the com¬ 
mon law. Having tried in vain to prevent all these 
hindrances to competition by litigation before the courts, 
we began two generations ago to establish administra¬ 
tive commissions to restrain them. 

We began this attempt more than half a century ago 
with the railroads by state, as distinct from Federal, 
action. The railroads were the earliest important in¬ 
dustry in which competition by the very nature and ex¬ 
tent of the investment and business proved impracticable. 
When the evils became intolerable the people felt them 
keenly but did not understand the cause thereof. The 
sole cause of the trouble was the lack of economic compe¬ 
tition and the resulting monopoly. But the populace did 
not understand that if competition were possible no regu¬ 
lation would be necessary. In their ignorance in trying 
to meet the evils, they undertook to regulate these 
monopolies and, by the same statutes, they required the 
roads to compete and forbade them to unite. Later, when 
the Federal government undertook to regulate the roads, 
they perpetuated the same mistake and contradiction. 
In trying to regulate rates and at the same time, to re¬ 
quire competition, the governments were trying, and are 


WHAT IS IT? WHAT IS IT WORTH? 35 

still trying, to do two virtually exclusive and contradic¬ 
tory things. 

Add to this, the fact of pioneer individualism and the 
deep seated hostility on the part of the individual to 
any restraint or intereference with his action, and, it is 
needless to say that the only possible good that came 
from the attempt was not positive and direct restraint 
by action of the commissions and their decisions, but a 
certain mild and vague publicity arising from the in¬ 
vestigations and the discussions and from the appoint¬ 
ments or election of the Commissioners. The power of 
the Commissions was further weakened by the fact that, 
in all the earlier days, this attempt to regulate was con¬ 
fined to the individual states, while every day the grow¬ 
ing complexity of the industry and the extension of the 
market made the operation of railroads more and more 
a national and not a state function. It took from 1869 
when the first state commission was established till 1887 
when the Interstate Commerce act was passed 1 to con¬ 
vince the people that federal action was necessary or 
constitutional. During these eighteen years the State 
Commissions were weak, were more or less in conflict and 
were very successfully fought by the railroads on con¬ 
stitutional grounds. Furthermore, in the then condi¬ 
tions of politics, the railroads were able to exercise a large 
influence in the choice of the Commissioners and in pre¬ 
venting large enough appropriations to enable the Com¬ 
missions to do their work effectively. When the Federal 
act was passed the roads were still claiming that any 
effective administrative control was unconstitutional but 
that such control, if it existed, was lodged in the in¬ 
dividual states. Consequently powers which Congress 
originally attempted to bestow upon the federal commis- 


1 The name of this Act has been changed. The above is the present 
legal name and has always been the popular designation. 



36 


THE ECONOMIC ORDER: 


sion were undoubtedly very small, and all disputed. 
Furthermore, the act had the vital defect of requiring 
competition as well as regulation. In other words, apart 
from its vague and limited scope, it had all the self 
contradictory provisions of the various state acts. 

From the passage of the Interstate Commerce act in 
1887 until we entered the Great War, the time and the 
energy were virtually all taken up in litigation before the 
courts in the attempt to determine under the Constitu¬ 
tion, the right of any power, to regulate by commission, 
and to delimit the respective rights of the federal and 
state governments in this field. The attempt was on the 
part of the roads to prevent all regulation on constitu¬ 
tional grounds and meantime to play one jurisdiction off 
against the other. This is neither the time nor the place 
to enter into a discussion of this lawyers' constitutional 
battle. 

Sufficient to say that these questions were still largely 
unsettled and regulation was essentially held in abey¬ 
ance almost until our entrance into the war caused the 
taking over into federal control and operation of the 
railroads under the war power. This suspended for the 
time being all other important regulatory statutes, state 
and federal, although it nominally permitted all the com¬ 
missions to remain in existence in a state of suspended 
animation. 

The Transportation Act by which the roads were 
turned back to their private owners for operation was 
passed on March 1, 1920, in the confusion and hysteria 
following the war, and on the eve of a presidential cam¬ 
paign. It, in form, but not in fact, made some pro¬ 
visions for abandoning the idea of competition, but the 
act is so loosely drawn as to make the provisions nuga¬ 
tory. It was equally vague on the relation of the state 
to national control, but in February, 1921, the Supreme 


WHAT IS IT? WHAT IS IT WORTH? 37 


Court, by a violent interpretation logically inconsistent 
with the great body of its previous decisions, virtually 
passed all powers of control to the hands of the Inter¬ 
state Commerce Commission and thus annihilated the 
power of the state commissions. 

We cannot here go into either the history or the im¬ 
portance of these charges. It is enough for our pur¬ 
pose to say that we are now trying to control the vast 
railroad system, consisting of 2,000 separate corporations 
virtually all created by the separate states, by a single 
commission to which Congress in 1920 granted greatly 
increased powers. Of these 2,000 corporations but 189 
are in Class I, that is, each has an annual income 
of more than $1,000,000; there are 280 roads of the 
Class II (income between $100,000 and $1,000,000); 
and 376 roads in Class III. There are 301 switching 
and terminal railroads in addition. All these classes 
report annually to the Commission. Apart from these 
there are 427 all of whose property is leased to other 
roads. The Class I roads own about 90 per cent of the 
mileage and earn about 98 per cent of the total railroad 
income of the country. 

Each of these 189 first-class roads is an amalagation 
of many separate corporations. The number running up 
in the case of some of the older and larger systems to 
something like five hundred. They have been welded 
together by every sort of arrangement and contract that 
the most skillful lawyers can invent, while in some cases 
some of the charters have been surrendered. The num¬ 
ber of live corporations in the larger systems runs into 
the scores. Such systems are all managed by a single 
group of men, or officers, who trade and dicker among 
themselves and play battledore and shuttlecock with 
the properties, contracts and accounts. We try to exer¬ 
cise a public control over such a mass of congeries of 


38 


THE ECONOMIC ORDER: 


corporations, with a total capitalization of more than 
twenty billions, a single commission, with all the busi¬ 
ness centralized in one office at Washington. The de¬ 
gree of centralization is probably greater than in any 
other important department in this or any other gov¬ 
ernment, and certainly much greater than is found in 
any of our larger unregulated private businesses. In fact, 
experience has demonstrated that the degree of central¬ 
ization is so great as to make effective regulations im¬ 
possible. This is true irrespective of the extent of statu¬ 
tory powers granted to the commission, or of the excel¬ 
lence of the personnel of the Commission or its staff, or, 
of the amount of money appropriated for the work of the 
Commission. 

These roads are of every degree of strength and of 
strategic location. There is no other instance on earth 
of so large a complexes of properties with so intri¬ 
cate a financial organization, so little subject in 
theory to competition in the Ricardian sense. There is 
no other in which the sovereign people, acting through 
the sovereign state, have so persistently and so long un¬ 
dertaken with so little advantage to apply worn out and 
impossible economic doctrines. The people have in¬ 
stinctively and correctly sensed the social and economic 
dangers and evils, and tried ever new and strange rem¬ 
edies and preventives. There will be no remedy and no 
checking of evils until the public grasps the fundamental 
truth that the doctrines of individual freedom of con¬ 
tract and competition have no logical relation whatever 
to the era of world division of labor and capitalistic ma¬ 
chine production through vast organizations known as 
corporations, treated as if they were individual, natural 
persons. 

If there were no other industries than the railroads we 
should have to modify profoundly our legal concepts 


WHAT IS IT? WHAT IS IT WORTH? 39 

of property rights and competition, and simplify our 
corporate organizations and finances. Because of the im¬ 
possibilities of real competition, among other reasons be¬ 
cause of the large fixed capital, so-called competing rail¬ 
roads will always have the same rates whether these rates 
are fixed without restraint by the roads themselves or 
by public authority, or the strong road will bankrupt 
the weak by cutting rates and will then buy it for a song, 
and present to the world a case of the most dangerous 
monopoly known to the world. To attempt to regulate 
rates of such competing monopolies, which in practice 
must have the same rates where parallel, is impossible. 
Since they cannot compete, yet for practical purposes 
they must have the same rates, the practice is wholly 
inconsistent with the doctrine of a reasonable rate and 
a fair return, both of which our law now requires. For 
a given uniform rate will either bankrupt the weaker— 
a result that no court or commission or other public 
authority will knowingly bring about by its act—or, 
if the rate is high enough to keep the weaker one out 
of bankruptcy, it will give the stronger what is in fact, 
and what the law declares to be, an unreasonably high 
and unlawful return. 

The transportation Act of 1920 undertook to meet 
this difficulty by providing for a rate high enough to 
save the weaker roads and then recapturing half of the 
excess earnings from the stronger roads. So far this 
provision of recapture has proved utterly incapable of 
administration and apparently will remain so. Besides 
it is probably unconstitutional. 

The attempt to apply to a given property, at a given 
time, such mutually exclusive and completely contradic¬ 
tory principles is to bring chaos into an industry and to 
make it highly inefficient, to injure profits, and, while 
annoying the industry to leave it, in fact, unregulated. 


40 


THE ECONOMIC ORDER: 


Merely to attack and injure is not to regulate. It is not 
too much to say, therefore, that the attempt to regulate 
railroads in the United States either by state or federal 
authority or by both authorities at the same time has 
failed, because it has been an attempt to enforce un¬ 
sound doctrines of economics. The attempt to regu¬ 
late by federal authority must have failed if the economic 
basis of regulation had been sound, because of so high 
a degree of centralization in the administrative body. 
Yet in the absence of any scientifically sound effort to 
regulate, perhaps, all our expenditure of time, money 
and labor have been justified merely as an educational 
process or venture. 

I have dwelt upon the railroads problem not for the 
sake of studying regulation as such, but because the rail¬ 
roads by their very natures are monopolies privately 
managed and owned in the interest of profits and not of 
service. They more vitally affect the lives of all than 
is the case of any other large industry and are perform¬ 
ing a service which is, in fact and in law, public. If we 
are, therefore, to apply the traditional and antiquated 
doctrines of individual free contract in regard either to 
the consumer, the trust or the laborers, the opportu¬ 
nities for exploitation of the patrons, the workmen, and 
even the investor are unparalleled and even appalling. 
That we should try to compel or even permit the roads 
to compete is both foolish and criminal: that they can 
be regulated, while in law and in fact they have an op¬ 
portunity to pretend to compete, is fatal to the public 
interest. It is futile to expect to regulate them while 
they are in competing or separate private ownership. 
It is equally unthinkable that they can be regulated un¬ 
til they are all unified in ownership and operation; or 
that any effective control or regulation can be exercised 
over them, even if they were all in one uniform system, 


WHAT IS IT? WHAT IS IT WORTH? 41 

without a decentralization of administration greater than 
now prevails in any of our federal departments and in¬ 
finitely greater than exists in the Interstate Commerce 
Commission. Should the government ever come to pub¬ 
lic ownership and operation, a like decentralization of 
the actual administration would have to be introduced, 
or the scheme would fail. 

But there as elsewhere in our industrial life, the funda¬ 
mental thing is that we should adopt, after we have dis¬ 
carded the present economic doctrines which have led 
to chaos and confusion and a deadlock in industry, 
some scheme other than the present capitalistic profit- 
seeking one. We must substitute the idea of service for 
the ideas of profits and speculation, and must establish 
a relation of the workmen to the capital, or instruments 
of production such as will dispel the fear of the workmen, 
and will give him a feeling that he is a man, and not 
a mere serf or tool of production, and that he has a real 
stake in the success and outcome of the enterprise. 

The present great railroad and coal strikes prove con¬ 
clusively that under the present system any large com¬ 
bination of either owners or workmen can, at will, 
virtually stop the industrial life of the nation and even 
endanger the lives of many, if not all, of our citizens. 
The President, on August 18, 1922, said truly that the 
nation is at the mercy of the united mine workers. He 
might with equal truth have said that it is at the mercy 
of the coal operators or of the railway executives. Cer¬ 
tainly the power of combined labor is not more dan¬ 
gerous than the power of combined capital. It is less 
dangerous at present simply because less powerful. 
Furthermore, it would be hard to convince a disinter¬ 
ested observer that the spirit of profit, private advantage 
or greed, or the desire for domination in their own inter¬ 
ests are stronger in the Labor groups than in the Capital 


42 


THE ECONOMIC ORDER: 


groups. The significant difference is that heretofore the 
capitalists have had more effective means of bringing 
public opinion and economic pressure to bear on the 
workmen, to make them give way in a struggle. 

It does no good to blame or abuse either side, but it 
behooves us all and especially the Church to strive with 
all our might to abolish a system that brings us to such 
a condition, and to hold up an ideal, and advocate a 
system more in harmony with the spirit of Christ, and 
of human brotherhood before it is too late. For it can¬ 
not be too often repeated that the present system is a 
system of war, fully as destructive as war between 
nations. In fact, so-called competition, on the basis we 
have been trying it for decades, among parties so un¬ 
equal in power, and the spirit of greed and domination 
that rules the system, is one of the most fundamental 
causes of war among nations. If competition in the 
Ricardian sense existed or could be made to exist no 
regulation of rates could be necessary. If regulation could 
be made effective there would be no occasion for trying 
to enforce competition. For reasons already fully ex¬ 
plained, competition cannot be enforced. But the people 
do not know this and they have instructively felt their 
inability to deal adequately with these gigantic masses 
of capital in any effective way by regulation. Hence they 
have tried both to regulate and to retain competition, 
that is to enforce two self-contradictory policies under 
the same statute, by the same Commissions at one and 
the same time. Such schemes have failed and always 
will fail. 

But my thesis is better illustrated by the steel in¬ 
dustry and the United States Steel Corporation than 
by the railroads. In the first place, the steel industry is 
one of the most fundamental and one of the very largest. 
It is one in which the processes have undergone enor- 


WHAT IS IT? WHAT IS IT WORTH? 43 

mous, dynamic and rapid changes. The Steel Corpora¬ 
tion is itself a merger and presents all important phases 
of the trust question. Furthermore, the total amount of 
fixed capital is not only large but the individual units are 
themselves unusually large, thus working men in very 
large masses or units. Again, the Steel Corporation 
owns and controls a large proportion of the total steel 
industry and is the most marked case in an important 
industry of a completely integrated industry, that is, one 
that controls directly the raw material from the first 
stage of production on through all the various processes, 
from the very beginning to the final consumer, at home 
or abroad. 

Besides all this, it is a matter of public record that 
the founders of this great trust gave more conscious and 
prolonged consideration at the beginning to forming a 
combination that would be large enough, various enough, 
and scattered over enough processes and territory to en¬ 
able it to prevent and to crush labor unions. The chief 
personality among the founders, when asked why they 
made the combination so large and took in certain plants 
for which they paid excessive prices if they anticipated 
going into a competitive market, answered very simply 
that they wanted to make the company so large that no¬ 
body would care to tackle it. He could not at the time 
have realized all the implications of this statement. For 
speaking economically, tackling it is a matter of com¬ 
petition. Competition is the antithesis of monopoly. 
A thing that cannot be “tackled” economically is a thing 
that exercises monopolistic power. When Mr. Morgan 
made the above remark he probably had a much clearer 
view than our legislators or courts or the public, of com¬ 
petition as I have described the term. He knew that 
such a combination was beyond the reach of effective 
competition, and, in so much as our lawmakers and 


44 


THE ECONOMIC ORDER: 


judges do not understand this, felt that the company 
could escape the charges of legal monopoly. 

The company has persistently and successfully pur¬ 
sued its anti-labor-union policy and is today the leader 
in the unparalleled attempt to smash all unions. The 
attempt to destroy the unions is now so universally 
recognized that even the President of the United States, 
who has never manifested much sympathy with the 
unions, calls attention to the efforts and condemns it in 
a public message August 18, 1922. In fact all competent 
and disinterested students look upon the attempt to 
crush all unions as dangerous so long as our general 
economic system remains unreformed. So far as the 
relations between employer and employe are concerned, 
the so-called competition between the parties has not 
for years had a single element of economic competition 
as the term was understood by Ricardo. On the one 
side, of this free contract has been a single ignorant, 
moneyless, foreign individual without power, political, 
educational or economic; on the other has been a com¬ 
bination of many thousands of owners controlling all the 
means of life in the neighborhood, often including 
all land, houses, stores, railroads and markets in the 
vicinity. If it is recalled that this is the largest and 
richest, and best integrated, privately owned corporation 
in the world, and that, through its relation to the bank¬ 
ing and credit facilities, it commands unlimited credit, it 
can readily be seen that to apply the term competition 
to this company in regard to its labor contract is simply 
to misapply words. Such a policy at this writing has 
forced about 1,000,000 workers in two of the most funda¬ 
mental industries to strike. The Supreme Court of the 
United States has after years of litigation ruled that 
the company is not in violation of the Sherman anti¬ 
trust act. But no one has yet explained why nobody 


WHAT IS IT? WHAT IS IT WORTH? 45 

has cared to tackle this company, or why bigness pre¬ 
vents anyone from tackling it successfully, or why the 
price of steel rails, from the foundation of the company 
until the Great War, more than 13 years, through good 
times and bad, remained absolutely fixed and stable, in¬ 
cluding the rails made by the independents as well as by 
the United States Steel Corporation. 

Yet this company drove the unions out and has kept 
them out through industrial peace times and through 
industrial war. Meantime until the Great War it kept 
wages much lower than wages in any other great in¬ 
dustry with equal danger and requiring as much skill 
and maintained longer hours and worse working condi¬ 
tions than in any other large industry. 

Although these facts have been exposed time and 
again, and proved by government investigations as well 
as by the famous Interchurch report, no significant 
improvement in working conditions (except prevention 
of physical accidents), hours, or pay were affected 
before the War. The War brought important and 
relatively great increase in profits and wages but not im¬ 
portant changes in other respects. • Although wages have 
been reduced since the War they are relatively much bet¬ 
ter than before the War—with the increase of Septem¬ 
ber 1, 1922, common labor is about 23 per cent below 
the high point in 1920. Although the evil conditions, 
particularly the excessive proportion of men working on 
twelve-hour shifts and on Sunday, were vigorously pro¬ 
tested against publicly more than a decade ago, there has 
been no marked improvement in these two particulars. 

No one knows how much money went into the plants 
before the formation of the Steel Corporation, but the 
most elaborate and careful investigations, public and 
private, have been made as to both the cost and the 
value of the properties at the time the company was 


46 


THE ECONOMIC ORDER: 


formed. From these it appears that at least half the 
capitalization was water. But all interest has been paid 
from the beginning and vast surpluses have been ac¬ 
cumulated and if the total paid out in dividends for the 
life of the company be averaged, liberal dividends have 
been paid on all the stock, including the water, for the 
whole period. The common stock which was at the be¬ 
ginning all water, because of the present surplus in these 
dull times, sells at about par. 

Meantime the worst exploitation of workmen known 
in America in the twentieth century under the guise of 
individual freedom of contract has gone on. The work¬ 
men have not only been illegally prevented from form¬ 
ing unions but have been generally denied the right of 
free assembly, free press and free speech. The uniform 
practices of the company in this particular have been 
in violation of the most explicit constitutional and statu¬ 
tory guarantees of the same, by both state and nation. 

When these facts are exposed, neither the company 
officially nor its officers individually deny them, but they 
maintain an army of private spies and carry on a per¬ 
petual propaganda in the attempt to discredit the gov¬ 
ernment and the private investigators and to break thus 
the force of the revelations. 

At the same time the moving spirit of the Company 
continues to preach the freedom of individual contract 
and free competition as the foundation of all human 
progress, and to denounce labor unions as the destroyers 
of all liberty and the oppressors of workmen. 

I have dwelt at length on the case of the Steel Corpora¬ 
tion not because it is any worse in motive or practice 
than others but because it is the largest, the most skill¬ 
ful and practically the most dangerous, and at the same 
time one of the most prosperous of the large companies. 
It is probably more conscious and consistent in its policy 


WHAT IS IT? WHAT IS IT WORTH? 47 


than any other great company. Until it can be reached 
and made to change its policy by law or by public opin¬ 
ion, there is no hope of industrial peace, or social justice. 
It is maintaining conditions and practices that are in¬ 
consistent with the perpetuity of a democratic form of 
government, of a decent civilization or with the profes¬ 
sion of any Christian Church. If it be said that the 
company cannot remedy these conditions under a com¬ 
petitive system, that is not proof that the conditions 
should be allowed to endure, but that the system that 
gives rise to such evils and makes them necessary should 
be abolished. 

It matters not how ignorant the managers of this com¬ 
pany may be of the effects of their actions, or how much 
they may believe that the working men belong to a lower 
order of nature than other men and can be dealt with 
successfully only in this way; or whether knowing, they 
choose to carry on this vitally necessary industry in this 
way for what they believe to be their own interests. 

In spite of the investigations, public and private, and 
of agitation and litigation extending over more than a 
decade, and in spite of war profits and increased sur¬ 
pluses and enlarged dividends there has been no im¬ 
provement in conditions except as regards wages and 
prevention of physical accidents. More than half the 
men in that part of the steel industry where continuous 
processes are necessary still work the twelve-hour day, 
and the Sunday labor has not been materially lessened. 
This means that after every competing nation has come 
to an eight-hour day in this industry, families represent¬ 
ing from five hundred thousand to seven hundred and 
fifty thousand people are subject to this barbarous treat¬ 
ment. Judge Gary has said for ten years that the steel 
corporation was about to abolish the twelve-hour day, 
yet something like seventy thousand of that corporation's 


48 


THE ECONOMIC ORDER: 


employees are still on the twelve-hour shift. Such work¬ 
ers may want more wages, more schools, more churches, 
baths, and toilets, but their souls cry out for justice. 
Preaching the Gospel to them falls on deaf ears. 

If Judge Gary is right in saying that wages are de¬ 
termined by demand and supply, and if this statement 
is correct, the church must insist that we control de¬ 
mand and supply. 

It is clear to any student of human nature that 
the ideals, standards, practices and motives of this, the 
most powerful corporation, will be copied by the lesser 
breed. All these elements in the steel corporation are 
pre-eminent for their badness, and all other large 
fianancial interests are virtually united with this power¬ 
ful group to prevent change. 

Has creation toiled and struggled through all the ages 
to bring forth such a civilization? Is this the fruit and 
the ultimate goal of civilization? Is there nothing higher 
for mankind? If so, there is no proper place for the 
church. 

Yet the church, if it does not approve this condition, 
at least tolerates it, and seems to be content if it can, 
in compensation for its quiescence, get some driblets of 
wealth wrung from this degradation. 

“To watch the church in the world is to be reminded 
of a poor relation from the provinces sitting silent and 
overruled in the gilded drawing-room of a parvenu. 
There is no sound of confidence in her voice. She whines 
for the world’s notice instead of denouncing its very 
obvious sins. She is too much in this world and too 
little in the other. She is too careful not to offend Dives 
but too selfish or self conscious to be seen openly in the 
company of Lazarus.” * * * 

Creation has not agonized in bloody sweat through 
countless ages of suffering and achievement that those 


WHAT IS IT? WHAT IS IT WORTH? 49 

who possess the highest opportunities for doing good 
should pervert these opportunities into a mere platform 
for the display of a harmful badness.” (Cf. The Mirrors 
of Downing Street, page 168.) 

I do not undertake on this occasion to say by what 
means the church should tackle this problem, but con¬ 
fine myself to the underlying principles involved. I 
have simply attempted to show that our present system, 
resting on the assumption that every man knows his own 
financial interests, and first, and last, and at all times 
seeks only those interests by competition, and is always 
able to maintain those interests, is inconsistent with the 
doctrines of Christianity as confessed by the church; and 
that, with the present unequal distribution of ownership 
and control of industry and under a system of large 
fixed capital, competition in the Ricardian sense is im¬ 
possible. The word has no proper application to our 
present economic conditions and life. The attempt to 
enforce competition, under existing conditions leads in¬ 
evitably to trusts, combinations, monopolies and ex¬ 
ploitation, that is, to a conscious and inevitable destruc¬ 
tion or prevention of competition. 

I have not attempted to set forth at any length the 
horrors of this exploitation such as the slums, the twelve- 
hour day, and Sunday labor, but wherever such power of 
exploitation exists the evils not only arise but are sure to 
continue to increase if not checked and destroyed by 
social control. Such a system is inconsistent with so¬ 
cial justice and human welfare. It denies and belies the 
only worthy purpose and end of economic activity—hu¬ 
man service—in satisfying the economic needs of man¬ 
kind. Furthermore, the system carries in itself the seeds 
of its own destruction. For it tends to lessen production 
and ultimately to check even the accumulation of capital 
and the progress of the arts on which material welfare 


50 


THE ECONOMIC ORDER: 


depends and on the advancement of which material 
progress rests. 

I have not advocated socialism. For the tyranny of 
a socialist state might easily prove as disastrous, and 
for the same reasons, as the exploitation of a combined 
and godless private capitalism. Nor have I advocated 
the equality of possessions, but an equal opportunity for 
all. I have not hinted at the abolition of private prop¬ 
erty or the confiscation of private property, but such a 
modification of property rights and the very concept of 
private property as will give equal opportunities to all 
and will correspond to modern needs and the Christian 
teachings, and such, therefore, as will harmonize and 
Christianize our industrial life and serve humanity. This 
would necessarily lead to less inequality of possession; 
a result absolutely essential if we are to retain our pres¬ 
ent political system. For all competent students now 
realize that a democratic form of government, with uni¬ 
versal adult suffrage, cannot endure where the mass of 
the voters are without property and a small minority are 
enormously wealthy. Such a condition is infinitely less 
stable than a nation half free and half slave. “Every 
free people may well say with the Hebrew sage, ‘Give 
me neither poverty nor riches/ The iderl condition for 
a state would be that in which the fortunes of its mem¬ 
bers were pretty nearly equal. Aristotle tells us that 
power is most safely lodged in the hands of the citizens 
of moderate means who have no motive for plundering 
the rich, and are not likely to be plundered by the poor. 
This class, he thinks, is less likely to show insolence. 
Neither does it excite envy. And Plato deploring the in¬ 
tensive strife which tore the Greek republics asunder, 
explains it by observing that in every city there are two 
cities, the Rich and the Poor.” (Bryce—The Hindrances 


WHAT IS IT? WHAT IS IT WORTH? 51 


to Good Citizenship. Lecture on Private Self Indulgence, 
page 171.) 

I have likewise avoided, and for like reasons, any 
reference to labor unions. The combination and concen¬ 
tration of capitalists make unions inevitable and funda¬ 
mentally necessary. Until the whole basis of industry 
is radically transformed, the labor union with its col¬ 
lective bargaining and threat of strikes will remain the 
greatest single check on the evils of deadly competition, 
s<" called, and exploitation, and therefore, the greatest 
mitigation of the evils of class war. But the union 
is not a cure. It occupies about the same relation to 
class war that the Red Cross does to war between 
nations. Neither of these agencies goes to the root 
of the matter or tends to prevent war. The recent 
and continuing gigantic effort to destroy the unions bids 
fair to succeed unless we strike successfully at the 
foundation of the difficulty and remove the causes of 
the strife. I digress for a moment on the aims of the 
unions and repeat what I wrote twenty-five years ago. 
The unions will never be content until they have at¬ 
tained three chief ends: namely, 

(1) A living wage in good times and bad, 

(2) A share in the management, 

(3) A chance at a share in the speculative or 

surplus gains above a living wage, when 
progress, invention, and discovery bring 
such gains or surplus to society. 

In other words, the workers claim a share in the 
economic progress and some degree of independence and 
self direction. The increasing power of man over nature 
in recent generations has constantly added to the pro¬ 
ductive power of mankind. So long as the manual 
laborers had hope and kept up their pace, this resulted 
in a constantly increasing surplus. 


52 


THE ECONOMIC ORDER: 


If the nervous strain, the hours of labor, and the un¬ 
employment be all taken into consideration, it cannot 
be said that the working classes have obtained a fair 
share of the surplus created by the progress ot the arts. 
The actual increase in real averages is not as great as is 
supposed. And their increased wages, taken in connec¬ 
tion with the time and strength left for leisure to enjoy 
an increased income, have not added to their well being 
or happiness to anything like the extent that was antici¬ 
pated by the economists of two generations ago when the 
new productive power first burst upon the world. 

Comparison is usually made as to the amount of wages 
alone. But a mere increase of wages alone, however 
great, will not satisfy and ought not to satisfy the work¬ 
men. Wages are but one means of life. The workers 
want life—more abundant life. They demand a real 
stake in our civilization and opportunity to share in the 
social and spiritual welfare of the race. The working 
people constitute the overwhelming majority of man¬ 
kind. If they are pure materialists, and have lost all 
interest in the higher and nobler things of life, the race 
is doomed, and the church, which has already lost its 
essential hold on this large class, finds itself now isolated 
from the world. 

No! If the church is to live and to guide the destinies 
of mankind it must not concern itself largely or com¬ 
pletely with the material condition of the working classes, 
however important that may be, but must claim for 
them an opportunity to share in the things of the soul 
and the spirit. It must see, however, that their bodies 
are not so treated as to destroy the soul. 


BOOKS ON ECONOMICS. 
SOCIAL AND INDUSTRIAL 


LIGHT ON SOCIAL AND INDUSTRIAL 
PROBLEMS 


1. CHRISTIANITY AND ECONOMIC PROBLEMS, a Discussion-Group Text 
Book, prepared for the Federal Council of Churches. Kirby Page, Editor. Facts, 
Principles, Programs. An invaluable reference book. 120 pages, cloth 50 cents. 

2. FACING THE CRISIS, by Sherwood Eddy. The Fondren Lectures of 1922. An 
outgrowth of 25 years of study, observation and addresses before students in all parts 
of the United States, Europe, the Near East and the Orient. A challenging discussion 
of the vital problems of the hour—philosophical, religious, social and industrial. 241 
pages, cloth-lined paper 50 cents, cloth $1.50. 

3. THE CHURCH AND INDUSTRIAL RECONSTRUCTION, by the Committee 
on the War and the Religious Outlook. A notable book, with chapters on the 
Christian Ideal for Society, Unchristian Aspects of the Present Industrial Order. 
Present Practicable Steps Toward a More Christian Industrial Order, Etc. 296 pages, 
paper $1.00, cloth $2.00. 

4. THE ACQUISITIVE SOCIETY, by R. H. Tawney, Fellow of Balliol College, 
Oxford. A vigorous discussion of rights and functions, industry as a profession, 
property and creative work, the condition of efficiency, etc. 188 pages, cloth $1.50. 

5. THE COMING OF COAL, by Robert W. Bruere, prepared for the Federal 
Council of Churches. A most thrilling account of the significance of coal in modern 
life. An illuminating presentation of the problems in the coal industry. 123 pages, 
cloth $1.00. 

6. THE RECONSTRUCTION OF RELIGION, by Chas. A. Ellwood, Professor of 
Sociology in the University of Missouri. Contains notable chapters on the Social 
Significance of Christianity. Our Semi-Pagan Civilization, Religion and Economic 
Life, the Opportunity of the Church, etc. 323 pages, cloth $2.25. 

7. JESUS CHRIST AND THE WORLD TODAY, by Grace Hutchins and Anna 
Rochester. A most stimulating discussion of current problems in the light of the 
spirit and teaching of Jesus—fearless and yet not dogmatic. 149 pages, cloth $1.25. 

8. THE IRON MAN, by Arthur Pound. Reprinted from the Atlantic Monthly. An 
outline of the social significance of automatic machinery. Should be read by every 
student of industrial problems. 230 pages, cloth $1.75. 

9. THE NEW SOCIAL ORDER, by Professor Harry F. Ward. An outline of prin¬ 
ciples and programs. Contains chapters on Equality, Universal Service, Efficiency, 
Personality, Solidarity, the British Labour Party, the Churches, etc. Cloth $1.50. 

10. PRINCIPLES OF THE NEW ECONOMICS, by Professor Lionel E. Edie. An 
exceedingly valuable presentation of the point of view held by the new school of 
economists. An abundance of reference material. 525 pages, cloth $2.75. 

11. AN INTRODUCTION TO THE STUDY OF LABOR PROBLEMS, by Pro¬ 
fessor Gordon S. Watkins. This is probably the most useful book of its kind available. 
Up-to-date information on a wide range of subjects. 664 pages, cloth $3.00. 

12. THE INDUSTRIAL CODE, by W. Jett Lauck and Claude S. Watts. A valuable 
discussion of the principles and structure needed to promote peace and efficiency in 
industry. Valuable appendices. 571 pages, cloth $4.00. 

13. EMPLOYERS ASSOCIATIONS IN THE UNITED STATES, by C. E. Bon- 
nett, Professor of Economics, Tulane University. While there have been many books 
published on trade unions, this is the first comprehensive discussion of the activities 
of the leading employers associations. 594 pages, cloth $4.00. 

14. PUBLIC OPINION, by Walter Lippmann. A vivid portrayal of the dangers of 
propaganda and a discussion of methods of forming public opinion. An important 
book on an important subject. 427 pages, cloth $2.25. 

15. PROPERTY, by the Bishop of Oxford and others. Contains stimulating 
chapters on the Evolution of Property, the Principle of Private Property, the Biblical 
and Early Christian Idea of Property, Property and Personality. 229 pages, cloth $2.00. 

16. HUMAN NATURE AND CONDUCT, by Professor John Dewey. An intro¬ 
duction to social psychology. Contains a notable chapter on Changing Human 
Nature. 336 pages, cloth $2.25. 

Any of these books may be ordered from 
ASSOCIATION PRESS 


347 Madison Avenue 


New York 


